GRRA - Greensboro Regional REALTORS® Association, Inc.

  Timeline:  In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

 

  Commissions:  The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

 

  No Borrower Fees:  Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

 

  Program Expiration: The program is in effect through 2012.

 

  Deed-in-Lieu of Foreclosure Option:  Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

 

CREDIT CRUNCH, ECONOMY HURT COMMERCIAL REAL ESTATE:

 

The economic downturn, complicated by a sever credit crunch, is dampening commercial real estate activity, NAR says. In addition, a forward-looking index indicates commercial real estate sectors will remain week for the remainder of the year. “Significant job losses have reduced the demand for commercial space, while a lack of credit has stalled transactions and refinancing activity,” says Lawrence Yun, NAR chief economist.  “It is critical for the Federal Reserve to increase liquidity by purchasing commercial mortgage-backed securities.”

 

HUD EXTENDS WAIVER FOR ANTI-FLIPPING RULE:

 

The U.S. Department of Housing and Urban Development (HUD) is extending the property flipping waiver to May 20, 2010, for FHA loans.  Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period.  The waiver does not apply to entities that purchase foreclosures either singly or in bulk for resale.  Subsequent sales of such properties will continue to be subject to the standard regulatory requirements.  HUD first announced the waiver on June 9, 2008, and the waiver was to be in effect for only one year.  HUD exempted from the property flipping rules for HUD REO properties, new homes being sold by builders, and owner’s employer as part of a job relocation.

 

LEGAL:

 

  Reminder: Be Cautious on Characterizing Admin Fee:  In light of a recent federal court ruling against a brokerage’s administrative fee as RESPA violation, brokers should take precautions in how they characterize their compensation, NAR General Counsel Laurie Janik says in a memo on the court’s decision.  Section 8(b) of the Real Estate Settlement Procedures Act (RESPA) prohibits charging a fee that’s not tied specifically to a service.  As interpreted by the court decision, an administrative fee to help offset operating and other costs is unearned because it connects to no specific service. NAR’s position is that this misconstrues the RESPA provision and the association has asked HUD for clarification, but that clarification is still pending.  Janik says the ruling is likely to be appealed once other proceedings in the case are completed.  In the meantime, brokers should clearly indicate that any flat fee in addition to a percentage-based commission they charge represents payment for services provided by the brokerage.  These combined amounts should be disclosed in the 700 section of the HUD-1 as the broker’s compensation.  NAR regulatory staff are also preparing an analysis of the court decision.

 

   Fannie Instructs Its Servicers Not to Cut Commissions on Short Sales:  In response to concerns raised by NAR, Fannie Mae instructed its servicers on February 24, 2009, not to negotiate commissions on short sales below the amount negotiated by the listing agent (unless the commission exceeds six percent (6%).  The requirement took effect with respect to closing on or after March 1, 2009. Fannie Mae recognizes that (a) negotiating commissions for short sales is unfair because short sales require intensive work over many months, and (b) compensating real estate agents fairly benefits Fannie Mae because agents play a crucial role in short sales.  Freddie has agreed to issue similar servicer guidance. To view the Fannie announcement, please visit https://www.efanniemae.com and search for “Announcement 09-03”.

 

 
 

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